US Warns Iran against Blocking the Strait of Hormuz

US Secretary of Defense Leon Panetta issued a clear warning Sunday that the US military will quickly respond if Iran attempts to carry out its threat to close the strategic Strait of Hormuz.


“We made very clear that the United States will not tolerate the blocking of the Strait of Hormuz, that's another red line for us and that we will respond to them,” Panetta said during a joint appearance with Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, at CBS’s “Face the Nation.”

“We've invested in capabilities to ensure that if that (blocking of the Strait) happens, we can defeat that,” Gen. Dempsey said. "We would take action and reopen the strait.” [CBS, 8 January].


Ahmadinejad in Caracas

Iranian President Mahmoud Ahmadinejad arrived in Venezuela today to begin a four-nation Latin American tour. This is Ahmadinejad’s fifth visit to Venezuela, one of Iran’s closest allies.

Ahmadinejad, accompanied by Venezuelan President Hugo Chavez, will later travel to Nicaragua for Tuesday's inauguration of newly re-elected President Daniel Ortega. He will then visit Cuba and Ecuador.

India to Pay for Iran Crude with ‘Non-Strategic’ Commodities

India plans to pay for the imported Iranian crude in rupee credit line, to be used by Iran to purchase ‘non-strategic’ Indian commodities. Under the proposal, the National Iranian Oil Company (NIOC) will open a rupee account with Indian banks, and can use the money to purchase non-strategic commodities yet to be identified. The Press Trust of India reported today that a team of Indian officials would visit Tehran on 16 January to finalize the payment issue between the two countries.

India currently imports 370,000 barrels per day of crude oil from Iran, worth more than 1 billion dollars a month, using Turkey as a conduit to pay for it. This arrangement will come to an end shortly when the new US sanctions against foreign banks transferring funds through the Central Bank of Iran goes into effect.

Majlis Session on Economy Cancelled; Rial Slides Against Dollar

The Iranian parliament, Majlis, today canceled its special session on “Rescuing the National Economy” when the government officials including the minister of finance and economy and the governor of the central bank failed to show up. The government did not explain why the ministers boycotted the highly anticipated session.

Meanwhile, the national currency’s rial restarted its slide against dollar. Late last week, after an aggressive intervention by the central bank, the exchange value of rial against dollar improved to 15,800 after hitting all-time low of 18,000. But on Saturday and Sunday, the currency lost 5% of its value, closing at 16,600 rials per dollar on Sunday.

Panetta Cautions Against Unilateral Israeli Attack on Iran

US Secretary of Defense Leon Panetta said today Iran is laying the groundwork for making nuclear weapons someday, but is not yet building a bomb and called for continued diplomatic and economic pressure to persuade Tehran not to take that step [AP, 8 January].

Panetta, making the comments on CBS' Face the Nation, also cautioned against a unilateral strike by Israel against Iran's nuclear facilities, saying the action could trigger Iranian retaliation against US forces in the region.

“We have common cause here (with Israel)," he said. "And the better approach is for us to work together.’ [AP, 8 January].

British Destroyer Heading to Persian Gulf

British Royal Navy’s HMS Daring, a Type 45 destroyer, is heading to the Persian Gulf amid threats by the Iranian military to stop foreign warships from entering the gulf.

HMS Daring is Britain’s newest warship that has a “stealth” design to help avoid detection by radar, the first of new destroyers replacing 1970’s Type 42 ships. The Type 45s are armed with high-tech Sea Viper anti-air missiles. They also have a large flight deck that can accommodate Chinook-type helicopters.

The deployment of HMS Daring to the Persian Gulf had been planned well in advance of the Iranian threat and it is considered entirely routine. Iran has also threatened to close the Strait of Hormuz if new sanctions disrupt its ability to export its oil. Daring will join other British warships already in the region.

British Defense Secretary Philip Hammond said in Washington earlier this week that both Britain and the US would ensure that their response to any provocation was “very measured, that there isn't an accidental escalation."

"What we cannot answer for is whether there is a plan on the other side to escalate," the secretary added.

Source: AFP, 7 January.

IRGC Conducts Military Drills Near Afghan Border

Commander of IRGC Ground Forces Brig. Gen. Mohammad Pakpour said in Tehran that the Corps has started military drills codenamed “Shohaday-e Vahdat” (Martyrs of Unity) in eastern Khaf area near the Afghan border. Gen. Pakpour added that the exercise was to strengthen the combat readiness of the IRGC Ground Forces in the area.

“Transferring the experiences of the Sacred Defense [Iran's eight-year war with Iraq] to the new generation and young officers and practicing tactical strategies of [the IRGC] ground forces in various combat sections of asymmetrical warfare are among goals of the Shohaday-e Vahdat drills,” Gen. Pakpour said [Fars New Agency, 7 January.]

Iran Welcomes US Rescue Operation

Humanitarian Gesture and Positive Development

Iran's Foreign Ministry Spokesman Ramin Mehmanparast said on Saturday that Tehran has welcomed the U.S. Navy’s rescue of 13 Iranian fishermen held by Somali pirates in the northern Arabian Sea. Mehmanparast called the rescue operation by US forces a humanitarian gesture and a positive development [IRNA, 7 January].

US Forces Rescue 13 Iranian Fishermen

Kidnaped by Somali Pirates and Held Captive for Two Months

The guided-missile destroyer USS Kidd today rescued 13 Iranian fishermen who had been kidnapped by Somai pirates and held captive for nearly two months. The US Navy reported that the American forces flying off the destroyer boarded the Iranian-flagged fishing dhow Al Molai after Kidd received a distress call from the Iranian ship’s master. The rescue team also arrested 15 Somali pirated onboard.

USS Kidd conducts counter-piracy and maritime security operations while deployed to Bahrain-based U.S. 5th Fleet.

Iran’s official news agency IRNA carried a short report on the rescue, quoting a Pentagon spokesman that 13 Iranians had been freed. IRNA has added that the Iranian military had not yet confirmed the rescue operation by US forces.

Photo: The freed Iranian ship next to USS Kid in the north Arabian Sea. 6 January 2012. Photo by U.S. Navy.

Velayat-90 Military Maneuvers (6)

click photos to enlarge

Sailors equipped with Iranian made G3 battle rifles

IRINS Gorz (PGGF 228) Kaman (Combattante II) class fast attack craft-missile

Foreground: Hendijan class tender (PBO 1410)

Bayandor (PF 103) class corvette

IRINS Larak (LSLH 512) Hengam class landing ship

IRINS Jamaran (FFGH 76) Moudge class light frigate

with IRINA Agusta AB-212ASW helicopter

Background: Alvand (Vosper Mk 5) class light frigate (FFG)

Ghadir class coastal submarine (SSC)

IRINS Kharg (AORH 431) Kharg class replenishment ship

Background: Delvar class support ship

IRINS Bandar Abbas (AORLH 421) Bandar Abbas class fleet supply ship

Yunes (Kilo/Project 877) class (SSK) diesel-electric submarine

IRINS Jamaran followed by two Alvand class light frigates

Background: IRINS Azadi (PB 202) Kaivan class large patrol boat

Regional foreign military observers, left to right: Syrian brigadier general and commodore

Photos: Hamed Jafarnejad at Fars News Agency

Majlis Considering Bill to Prohibit Foreign Warships from Entering Persian Gulf

The Iranian parliament, Majlis, was preparing a bill that would prohibit all foreign warships from entering the Persian Gulf unless they received permission from the Iranian navy. The proposed bill was introduced on Wednesday [Fars News Agency, 5 January].

Iran’s armed forces commander has already warned the US not to send its aircraft carriers to the strategic waterway. The remarks, when it was made on Tuesday, surprised many Iran watchers as out of synch with the country’s policies of not initiating overt hostile actions in the region. But the proposed legislation suggests that at least some Iranian officials are serious about trying to stop the US Navy from entering the Persian Gulf, notwithstanding its status as an international waterway.

Britain Warns Iran over Strait of Hormuz

British Defense Secretary Threatens Military Retaliation if Strait is Closed

Britain’s Defense Secretary Philip Hammond warned Iran today that the UK would respond militarily if Tehran tries to close the Strait of Hormuz in retaliation over sanctions. Britain considers any action by Iran to close the strait as “illegal and unsuccessful,” the secretary said, insisting that western navies in the Persian Gulf must ensure the free flow of oil trade [Financial Times, 5 January].

Mr. Hammond is in Washington today for meetings with US Secretary of Defense Leon Panetta and senior Pentagon officals. He made his comments during a speech to the Atlantic Council in Washington.

Britain’s Royal Navy is part of a combined maritime forces fleet which is based in Bahrain and has deployed mine countermeasure vessels in the Persian Gulf.

Iran Oil Embargo Agreed by EU

Reuters reported today that the European governments have agreed in principle to ban imports of Iranian oil. Diplomats said a previous objection by Greece, which gets a third of its oil from Iran, has been dropped [Reuters, 4 January].

EU countries buy about 450,000 barrels per day (bpd) of Iran's 2.3 million bpd in exports, making the bloc the second largest market for Iranian crude after China. France has said it wants the EU embargo agreed at a meeting of the bloc's foreign ministers at the end of January.

Velayat-90 Military Maneuvers (5)

click photos to enlarge

Qader ("Capable") anti-ship missile fired from mobile dual launcher.

Claimed range is 200 kilometers.

AShM dual launcher with retractable canvas covering

Extended box launchers for longer Qader AShMs

Nasr ("Victory") anti-ship missile fired from mobile multiple launcher

Foreground: AShM mobile triple launcher

High ranking Artesh officers

Marine or Naval Commandos equipped with G3 battle rifles

Videos:

Photos: Hamed Jafarnejad at Fars News Agency
Videos: maydayfire at IMF

Oil Prices Rising; Fears of Naval Confrontation in the Persian Gulf

Oil prices soared on Tuesday after the commander of Iranian armed forces issued an explicit warning to US Navy aircraft carrier USS John C. Stennis to stay out of the strategic Strait of Hormuz. Brent crude future hit $112, and gold markets closed at their highest level in 10 weeks. An average of 17 million barrels of crude oil is shipped through the Strait every day.

The US dismissed the threat as a bluff, saying that it would continue to deploy its ships in the Persian Gulf “as it has for decades.”

Within hours of the US response, the deputy commander of IRGC, Maj. Gen. Hossein Salami, said in Tehran that Iran’s confrontation with the West had reached a critical point.

“Our position against the enemy [the US] has moved from strategic to operational,” Gen. Salami said [Fars News Agency, 3 January].

The US could soon have three aircraft carriers in the region: the returning Stennis, the USS Carl Vinson and the USS Abraham Lincoln.

Meanwhile, the Central Bank of Iran (CBI) flooded the foreign currency market in Tehran with dollars to stop the freefall of the national currency rial. Fars News Agency reported that the CBI is injecting another $200 million into the currency market on Wednesday to stabilize the rial and preventing it to slide below the parity rate of 16,000 per dollar.

Pentagon: US Navy Will Remain in Persian Gulf

The U.S. Department of Defense today responded to a warning issued by Iran’s army commander to keep US aircraft carriers out of the Persian Gulf by declaring that American warships will continue regularly scheduled deployments to the strategic waterway.

George Little, the Pentagon press secretary, said the Navy operates in the Gulf in accordance with international law and to maintain “a constant state of high vigilance” to ensure the flow of sea commerce.

Earlier today, the commander of Iran’s regular military warned the American aircraft carrier USS John C. Stennis not to return to the Persian Gulf. The aircraft carrier left the Gulf through the Strait of Hormuz last week after visiting UAE’s port of Jabal Ali.

“The deployment of U.S. military assets in the Persian Gulf region will continue as it has for decades,” Mr. Little said. “These are regularly scheduled movements in accordance with our longstanding commitments to the security and stability of the region and in support of ongoing operations.” [AP, 3 January].

The US Navy 5th Fleet has long been headquartered in Bahrain. It was not clear why the Iranian army chief made the explicit threat ("We warn only once"), knowing that the US Navy Fleet is based in Bahrain, and its carries would regularly pass through the Strait of Hormuz. It was also not clear how Gen. Salehi would react to the Pentagon's declaration that it will indeed continue its presence in the Persian Gulf and its carriers will pass through the Strait.

Iran Military Commander Warns US Carrier Not to Return to Persian Gulf

Latest of Tough Rhetoric Out of Tehran

Commander of Iran's Army Maj. Gen. Ataollah Salehi warned an American aircraft carrier not to return to the Persian Gulf, adding that the warning comes “only once.”

“We recommend to the American warship that passed through the Strait of Hormuz and went to Gulf of Oman not to return to the Persian Gulf,” said Gen. Salehi, referring to the USS John C. Stennis which left the Persian Gulf this week after visiting UAE’s port of Jabal Ali.

“Since we are not in the habit of repeating a warning, we warn only once,” Gen. Salehi added [IRNA, 3 January].

The comments by the commanding general of the country’s regular military, speaking at the end of a 10-day Iranian naval exercise near the Strait of Hormuz, is the latest of tough rhetoric coming out of Tehran over the Strait of Hormuz and the US naval presence in the Persian Gulf.

File Photo: USS John C. Stennis. Reuters

Rial in Freefall - UPDATES

Iran’s currency rial continues its rapid decline, hitting a new record low to the US dollar today. IRNA, the country’s official news agency, reported that the market exchange rate was at 16,400 rials to the dollar in mid-day trading [IRNA, 2 January]. The state broadcasting system later reported that rial was trading at 16,800 [IRIB, 2 January].

The new rate represents a 7% decline in value since Saturday, when President Obama signed the legislation imposing sanctions on financial institutions dealing with the Central Bank of Iran (CBI). The sanctions are to go into effect within the next six months.

The rial has lost nearly 55% of its value against the US dollar since January 2011, when it was traded at 10,850 to the dollar.

UPDATE: The semiofficial Fars News Agency reported that rial has hit an all-time low of 17,000 per dollar on Monday, or nearly 60% of its value in one year [Fars News Agency, 2 January].

UPDATE: Reports from Iran indicate that the rial has hit a low of 17,800.

UPDATE (Tuesday 3 January): Rial regained some of the lost value today and was trading at 16,000 per dollar. On Monday, rial started trading at the beginning of the day at an all-time low of 16,400, and quickly lost further value ending the day at 17,800.

Photo: IRNA

Iran Produces Uranium Fuel Rod

Iran announced a nuclear fuel breakthrough today. The state television said Iran has successfully produced and tested its own uranium fuel rods for use in nuclear reactors. The rods were made in Iran and inserted into the core of Tehran's nuclear research reactor. The breakthrough is a major step in developing a complete domestic nuclear fuel cycle to power reactors [IRIB, 1 January].

Income and Life in Urban and Rural Iran

The government’s Statistics Center of Iran (SCI) today released its annual report on family life and income in the country [Mehr News Agency, 1 January].

• The average annual income for a family living in urban areas is 106 million rials, equivalent to $6,666 in today’s market currency rate.
• The average annual income for a family living in rural areas is 59 million rials, or $3,711.
• The average annual expense for urban households is 113.8 million rials, or $7,168. Meaning the families in the cities spend 8% more than their income. 23% of urban household expenses are for food, and 33% for housing. 24% of urban households rent or lease their houses and apartments.
• 33% of urban households earn their income through wages and salaries, 18% through their small businesses, and an unexplained 49% of urban households list their income source as “other.”
• 91% of urban households use natural gas for heating and cooking, 88% have mobile phones, and 37% have automobile.
• In rural areas, the average annual household expenses are 68.5 million rials, or $4,300. Meaning an average rural household’s expenditure some 16% more than its income. 34% of rural households are engaged in farming, 33% earn their income through wages and salaries, and 32% from other sources.

The figures indicate that the Iranians have more disposable income than ever before, and are enjoying the modern amenities of life, such as automobile and mobile phone. They are, however, spending more than their income, probably as a result of rising inflation, with no savings.

49% of the household income in urban areas, and 32% in rural areas, are not from wages or salaries or small businesses or farming, unusually high numbers that need further explanations. The size of an average household was not reported.

HAPPY 2012!